The creation of the Worldwide Asset eXchange™ (WAX), a decentralized platform that enables anyone to participate in a marketplace for virtual game assets, demonstrates the power of tokenizing in-game items. WAX will reduce transaction costs, create marketplaces for games in which it was not previously possible to transfer assets, and fractionalize player profits from centralized exchanges. Tokenization enables ownership of virtual assets, creating a new, more accessible economy with the potential to expand into physical assets.
Safeguarding the WAX Token and Virtual Asset Bond
One of the biggest challenges to tokenizing assets has been determining how to monitor and ensure tokens on the blockchain remain tied to their asset. WAX’s multi-layered governance approach creates regulatory oversight by token holders themselves. The virtual asset exchange process is conducted through users responsible for transferring items, known as Transfer Agents, their supervisory committees called Guilds, rating systems, and a delegated proof of stake consensus algorithm.
If Transfer Agents fail to perform their duties, a Guild’s reputation and financial stake will be affected. If Guilds do not take proper action against underperforming Transfer Agents, token holders will not re-elect them to govern their game. This economic feedback loop assures WAX tokens remain connected to their virtual asset.
Enhancing Value and Security by Fractionalizing Physical Items
We are entering an era when it is possible to own a percentage of an original Aston Martin from a James Bond movie, a Babe Ruth baseball card, or a star NBA player’s shoes worn in a championship game. The possibility of fractionalizing physical assets opens up new possibilities for fans and collectors. By decentralizing the governance and delivery operations of modern day exchanges, Guilds will specialize in regulatory oversight by authenticating items and monitoring ownership, while Transfer Agents focus on asset delivery. Future state Guilds and Transfer Agents could potentially implement RFID and IoT technologies to record the location of assets in real time, ensuring WAX tokens are connected to their correct owners.
Extended services provided by Guilds with a high reputation will increase a product’s value. When Guilds create confidence in asset authenticity, sellers will be deterred from selling items without updating the on-chain WAX token. The inherent value of physical items transacted on WAX’s platform will increase as network reputation and credibility is established.
A blockchain with physical assets transacted on infrequently is less secure than a blockchain with continual transaction growth. Incorporating physical assets into WAX would increase security, as frequently traded virtual items are hashed to infrequently traded physical assets. With transactions continually added to WAX’s blockchain, the risk of hackers manipulating transactions is reduced, as they would have to rehash all transactions following the manipulation.
Worldwide Asset eXchange’s innovations are creating a new ecosystem of assets that could never before be exchanged. As virtual items are successfully traded, WAX will be in a strategic position to onboard physical asset groups to their platform, and create expanded services that guarantee WAX tokens on the blockchain remain tied to their corresponding physical items.